rr-10-09.pdf

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Part 1 Section 6621.--Determination
of Rate of Interest
26 CFR 301.6621-1: Interest rate.

Rev. Rul. 2010-9

Section 6621 of the Internal Revenue
Code establishes the rates for inte
rest on tax overpayments and tax
underpayments. Under section 6621(a)(1),
the overpayment rate is the sum of
the federal short-term rate plus 3
percentage points (2 percentage points in t
he case of a corporation), except t
he rate for the portion of a corporate
overpayment of tax exceeding
$10,000 for a taxable period is
the sum of the federal short-
term rate plus 0.5 of a
percentage point. Under section 6621(a)(2
), the underpayment rate is the sum of
the federal short-
term rate plus 3
percentage points.
Section 6621(c) provides that for purposes of in
terest payable under secti
on 6601 on any large corporate
underpayment, the underpayment rate under se
ction 6621(a)(2) is determined by substi
tuting "5 percentage points" for "3
percentage points."

See section 6621(c) and section 301.6621-3 of
the Regulations on Procedure and Admini
stration for the definition of a
large corporate underpayment and for t
he rules for determining the applicable
date. Section 6621(c) and section
301.6621-3 are generally effective for per
iods after December 31, 1990.
Section 6621(b)(1) provides that the Se
cretary will determine the federal short-te
rm rate for the first month in each
calendar quarter. Section
6621(b)(2)(A) provides that the federal short-
term rate determined u
nder section 6621(b)(1)
for any month applies during the first cale
ndar quarter beginning after that month.
Section 6621(b)(2)(B) provides that in
determining the addition to tax under section 6654 for failure to
pay estimated tax for any tax
able year, the federal short-
term rate that applies during the third mont
h following the taxable year
also applies during the fi
rst 15 days of the fourth
month following the taxable year. Section 6621(b)(3) provides t
hat the federal short-term rate
for any month is the federal
short-term rate determined duri
ng that month by the Secretar
y in accordance with section
1274(d), rounded to the nearest
full percent (or, if a multiple of
1/2 of 1 percent, the rate is increas
ed to the next highest full percent).

Notice 88-59, 1988-1 C.B. 546, announced that, in dete
rmining the quarterly interest rates to be used for
overpayments and underpayments of tax under
section 6621, the Internal Revenue Serv
ice will use the federal short-term
rate based on daily compounding because that rate is most consis
tent with section 6621 which,
pursuant to section 6622,
is subject to daily compounding.
The federal short-term rate deter
mined in accordance with section 1274(d) during January 2010 is the rate
published in Revenue Ruling 2010-6, 2010-6 IR
B 387 to take effect beginning Februar
y 1, 2010. The federal short-term
rate, rounded to the nearest full percent, based on daily co
mpounding determined during the month of January 2010 is 1
percent. Accordingly, an overpayment ra
te of 4 percent (3 percent in the ca
se of a corporation) and an underpayment

rate of 4 percent are established for t
he calendar quarter beginning April 1, 2010. Th
e overpayment rate for the portion of
a corporate overpayment exc
eeding $10,000 for the calendar
quarter beginning April 1, 20
10, is 1.5 percent. The
underpayment rate for large corporate under
payments for the calendar quarter beginn
ing April 1, 2010, is 6 percent.
These rates apply to amounts bearing inte
rest during that calendar quarter.

Under section 6621(b)(2)(B), the rate fo
r determining the addition to tax for failur
e to pay estimated tax for the first
15 days in April 2010 is the 4 percent ra
te that applied to underpaym
ents of tax during the firs
t calendar quarter in 2010.

Interest factors for daily compound in
terest for annual rates of 1.5 percent,
3 percent, 4 percent, and 6 percent are
published in Tables 8, 11, 13, and 17 of Rev. Proc
. 95-17, 1995-1 C.B. 556, 562,
565, 567, and 571.

Annual interest rates to be compounded da
ily pursuant to section 6622 that apply
for prior periods are set forth in
the tables accompanying this revenue ruling.

DRAFTING INFORMATION

The principal author of this revenue ruling is Deborah Co
lbert-James of the Office
of Associate Chief Counsel
(Procedure & Administration). For further
information regarding this revenue ruling,
contact Ms. Colbert-James at (202)
622-8143

(not a toll-free call).